MEA Unit II

7/26/2019 MEA Unit II

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CONSUMER BEHAVIOUR


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DEMAND DETERMINANTS# PRICE

# BUYERS INCOME

# AVAILABILITY & PRICE OF SUBSITUTES OR COMPETING

PRODUCTS

# ADVERTISING & SALES PROMOTION

# POPULATION

#AVAILABILITY OF CREDIT

# ONES STATUS


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# GEOGRAPHIC LOCATION OF BUYERS

# CHANGES IN CONSUMER TASTES

# NEEDS & PREFERENCES

# CHANGES IN CONSUMER CREDIT FACILITIES

# SEASON OF THE YEAR

QD= f(P, A, C, D, E F, ---------- )

DEMAND DETERMINANTS Contd.


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SOME FACTORS DESERVE A DISCUSSION

# PRICE

# INCOME

# PRICE OF SUBSITUTE AND COMPLEMENTARY GOODS

# ADVERTISING AND SALES PROMOTION


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#THESE FACTORS HAVE A GREAT INFLUENCE ON SALES

# CAN BE EXPRESSED AND MEASURED IN VARIOUSWAYS

# IMPORTANCE OF THESE FACTORS VARY FROM PRODUCT TO PRODUCT

# SOME ARE WITHIN A FIRMS CONTROL ANDSOME ARE NOT


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C!"$%' G!! P'!$*' G!!


7/123

Con!"$ Good

C!"$%' +!! ' .! /.0*. ' 0121 f!' $10%*!"$%30!"4T. +0 0'* " 0%%0 0f*0!"4

E5 B', A331, R0* *4

P$od!%$ Good

P'!$*' +!! ' .! /.0*. ' $ f!' f$'.' 3'!*0"+ !'3'!$*0!" !f +!!6'0* ! '" 0"*!%4

E5 S1, C%", M*.0"'7, T'*!' *4


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A$!"!%!$ D%" D'0 D%"


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A!tono"o! D"&nd

A$!"!%!$ %" 'f' ! . %" f!' 3'!$*" '0* 0'*174

E5 M!201 P.!", H!$, S.! *4

D$'(d D"&nd

D'0 %" 0 . %" !f 3'!$*6'0* '00"+

!$ 3$'*. !f 3'" 3'!$*4

E5 S1, C%", B'0*8 *4


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D$'21 P'0.21 G!!


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D!$&)* GoodD$'21 +!! ' .! +!! /.0*. +0 '0* '1017f!' 1!"+' 3'0!4

E5 TV, F'0+, 9.0"+ M6C, R0* *4

P$'+&)* Good

P'0.21 +!! ' .! +!! /.! 10f 0 '7 1, %72 0" .!$' !' 74

E5 M018, F1!/', V+21 *4


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F0'% %" I"$'7 D%"


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N/ D%" R31*%" D%"


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NEW DEMAND

N/ %" 'f' ! . %" f!' . "/ 3'!$*4

REPLACEMENT DEMANDR31*%" %" 'f' ! . %" '$10"+ !$Of '31*0"+ . 500"+ /0. "/ !"4


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T!1 M'8 " S+%" M'8 %"


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DEMAND , PRICE

# DEMAND -ECONOMICS /

DESIRE TO BUY BAC:ED BY ADEQUATE PURCHASINGPOWER

# DEMAND FOR GOODS0

SOMEONE IS ABLEAND 9ILLINGTO BUY

VARIOUS QUANTATIES THAT A CONSUMER 9ILL TA:E OFFTHE MAR:ET DURING A TIME UNIT AT DIFFERENT PRICES4


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LAW OF DEMAND

; HIGHER THE PRICE, LO9ER THEDEMAND AND VICE VERSA !f ?@

DEMAND IN PRODUCT6OUTPUT MAR:ETS

%" *$' A +'3. 011$'0"+ .!/

%$*. !f +0" 3'!$* .!$.!1/!$1 2 /0110"+ ! 2$7 0ff'"3'0*4


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DEMAND IN PRODUCT6OUTPUT MAR:ETS

O.' P'!3'0 !f D%" C$'

As long as households have limited incomes and wealth, all demand curves will intersect

the price axis. For any commodity, there is always a price above which a household

will not, or cannot, pay. Even if the good or service is very important, all households

are ultimately constrained, or limited, by income and wealth.

That demand curves intersect the quantity axis is a matter of common sense. Demand

in a given period of time is limited, if only by time, even at a ero price.

T/! 00!"1 .0"+ ' "!21 2!$%" *$'4


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CHIEF CHARACTERISTICS OF LAW OF

DEMAND

# INVERSE RELATIONSHIP

# PRICE AN INDEPENDENT VARIABLE , DEMAND ADEPENDENT VARIABLE

# OTHER THINGS REMAIN THE SAME

# REASONS UNDERLYING THE LAW OF DEMAND0

1 INCOME EFFECT

1 SUBSTITUUTION EFFECT


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SHIFT OF DEMAND VERSUS MOVEMENT ALONG ADEMAND CURVE

TABLE 3.2 Shift of Annas Demand Schedule

Due to increase in Income

SCHEDULE D0 SCHEDULE D1

Price(Per Call)

Quantity

Demanded

(Calls Per Month

at an Income of$300 Per Month)

Quantity

Demanded

(Calls Per Month

at an Income of$600 Per Month)

$ 0 30 35

.50 25 33

3.50 7 18

7.00 3 12

10.00 1 7

15.00 0 2

20.00 0 0

FIGURE 4 S.0f !f D%" C$'

F!11!/0"+ R0 0" I"*!%


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FIGURE 4? S.0f '$ M!%"1!"+ D%" C$'


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EXCEPTIONS TO LAW OF DEMAND

# SNOB APPEAL

# SPECULATIVE MAR2ET

# THE GIFFEN P&$&do3


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M4t5. R&$%+ , *&6 o7 d"&nd-LOD 0 "! . 1 /!' !" C!"$%' B.0!$'

-S1 P'!" . !f" f!$" . LOD 0''1"

-M'8 R'*. /' 8 ! 1!3 %!' 021 .!'7 !f C!"$%' B.0!$'

-M'8 R'*. . 3'!3! *'0" P'!3!00!"" H73!. 2 !" %30'0*1 0"0+0!"


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P$o8o't'on , H98ot+

# A 8$on 6+o +& %on7'dn% 'n 8$'%'n7o$"&t'on & & 8$d'%to$ o7 :!&*'t9 t+%+&n% &$ t+&t + 6'** 5o 7o$ +'5+ 8$'%d 5ood

# P$on 38$'n%d 'n P!$%+&'n5 & 8$od!%t

6'** %+oo & *o6 8$'%d 't" o$ ('% ($&


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H98ot+ , P$o8o't'on -%ontd

Po8* 6+o 8!$%+& +'5+ 8$'%d 't"0

# 210 . 0 0 0ff0*$1 ! $+ 3'!$* Q174

# /011 3'*0 1'+ Q174 D0ff'"01

# /011 f1 '087 " $"*'0" ! +! f!' 1!/ 3'0* 0%

# . *.%" !/' P'0+ & S!*01 0+"0f0*"*


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H98ot+ , P$o8o't'on -%ontd

# B$0" 5*$0 1! 0210 . *!"$%' 0 '0!"1

# T.7 ' 2ff1 . 2.0!'

# T730*1 * !f 0''0!"107 Y1 L!*8

# A**!'0"+ ! !" A%'0*" ''*.' ; P$'*.0"+ 2.0!' !f *!"$%' 0 '300


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In7$n%0

# T! 8"!/ 2!$ C!"$%' B.0!'

0 "! ! 0%31

# B$7' ! "! "*'017 2. **!'0"+ ! L/ !f D%" 0" *$1 3'*0*


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T. C!"*3 !f E10*07

Elasticity0 %$' !f . '3!"0"

!f !" '021 ! "!.'4

T. +'' . 10*07, . +'' .

'3!"0"4


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P$'% E*&t'%'t9 o7 D"&nd

-LOD ! "! .!/ %$*. . Q74 %" 0"*' '$1 !f *'0" f11 0" . 3'0* !' V0* '

-LOD 11 $ !"17 2!$ . 0'*0!" !f *."+

-I ! "! 11 $ . ' /.0*. . *."+ 831*

-T! 8"!/ 2!$ . % 8"!/1+ " $"'"0"+ !f P'0* E10*07 !f D%" !' E10*07 !f D%" 0 '$0'4

- EOD 0 0ff'" f'!% LOD .!$+. 0 0 2 !" LOD


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EOD; T+ d5$ o7 $8on'(n o7 :t9. d"&ndd

to & %+&n5 'n P$'% / :t9. d"&ndd &7t$ 8$'% %+&n5

P? / P$'% %+&$5d )7o$ 8$'% %+&n5

P> / P$'% %+&$5d &7t$ 8$'% %+&n5


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A %!0f0*0!" M0 P!0"

Q Q -------- Q Q ---------- = P- P -----------

P P ------------


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:> :? 111111111111 :> @ :? / ============= P>1 P? 11111111111

P> @ P?


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T+price elasticity of demand' t+ 8$%nt&5%+&n5 'n !&nt't9 d"&ndd d'('dd )9 t+8$%nt&5 %+&n5 'n 8$'%4

P'0* E10*07


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S0+" !f P'0* E10*07

A%%o$d'n5 to t+ *&6 o7 d"&nd 6+n($ t+

8$'% $' t+ !&nt't9 d"&ndd 7&**. T+! t+8$'% *&t'%'t9 o7 d"&nd ' &*6&9 n5&t'(.

B%&! 't ' &*6&9 n5&t'( %ono"'t!!&**9 t&t t+ (&*! 6't+o!t t+ '5n.


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:!t'on0T. **!%3"70"+ 21 +0 3' !f . $3317 *.$1 f!'3'!"1 *!%3$' 0" . U"0 S4

P'0* !f *!%3$' Q$"07 !f *!%3$' $3310

JJ ,JJJ

,JJ >,JJJ

C1*$1 . 3'0* 10*07 !f $3317 /." . 3'0*0"*' f'!% JJ ! ,JJ $0"+ .%03!0" %.!4


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Solution:

!" # "$%%% &" # '%%, !$ # (%%% &$ # ""%%

(%%% ) "$%%%

******************* $%%%%

e+p # *************************

""%% ) '%%

****************

$%%%

# +* $


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P$o)*" 0I7 N'* *&t'%'t9 o7 d"&nd7o$ +ot do5 ' %ont&nt*9 .&nd + )!9 +ot do5 6+n t+8$'% ' ?. 8$ +ot do5 +o6"&n9 6'** + )!9 6+n t+

8$'% ' ?. 8$ +ot do5


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!$ ) !"

************

!"

e+p # *******************************

&$ ) &"

************

&"

!$ ) -

***********

-

%.' # *************************

" ) ".

**********

".!$ # .$

/ay 0otdogs


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P$o)*"

2&t+$'n &d($t' to ** %oo4' 7o$ & doJn. S+ ** doJn &nd d%'dt+&t + %&n %+&$5 "o$. S+ $&'t+ 8$'% to K & doJn &nd ** doJn. W+&t ' t+ *&t'%'t9 o7 d"&ndA!"'n5 t+&t t+ *&t'%'t9 o7 d"&nd '%ont&nt +o6 "&n9 6o!*d + ** '7 t+

8$'% 6$ ? & doJn


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/olution1

"

!" # % &" # -

!$ # -% &$ # 2

-% ) %

***********

%

e+p # ******************

2 ) -

**********

-

# * %.-

$

!" # % &" # -

!$ # 3 & $ # "%

e+p # *%.-

!$ ) % ***********

%

* %.- # **************

"% ) -

*********

-

!$ # $% doens

T98 o7 P$'% E*&t'%'t9


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98 o % *&t % t9

4P'f*17 E10* N! '$*0!" 0" 3'0* 0 " !

*$ " 0"*' 0" %"

4 P'f*17 I"10* A *."+ 0" 3'0* .!/' 1'+*$ "! *."+ 0" %"

4 U"07 E10*07 P'!3!'0!" *."+ 0" 3'0* *$" $13'!3!'0!" *."+ 0"

%"?4 R1017 10* %" '$*0!" 0" 3'0* 1

! %!' ." 3'!3!'0!" *."+ 0" %"K4R1017 0"10* %" - '$*0!" 0" 3'0* 1 ! 1 ." 3'!3!'0!" *."+ 0" %"


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Type 4umerical Expression /hape of 5urve

&erfectly Elastic Ho$'Jont&*

P$7%t*9 'n*&t'% V$t'%&*

Un't E*&t'%'t9 ? R%t. H98$)o*&

R*&t'(*9 E*&t'% ? F*&t

R*&t'(*9 In*&t'% ? St8


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PED %&n &*o )0

* t+&n on 6+'%+ "&n PED ' inelastic.G$&t$ t+&n on 6+'%+ ' elastic.

$o - 6+'%+ 'perfectly inelastic.

In7'n't - 6+'%+ 'perfectly elastic4


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IN $&* *'7 6 5n$&**9 "t > , %&


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F&%to$ Dt$"'n'n5 P$'% E*&t'%'t9 o7 D"&nd

# N&t!$ o7 D"&nd

# E3tnt o7 U

# R&n5 o7 S!)t't!t

# In%o" L(*

# U$5n%9 o7 D"&nd

# D!$&)'*'t9 o7 & %o""od't9


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".4ature of 5ommodity1

Demand of necessities is inelastic, Ex1 /alt, wheat etc. Demand of luxuries is elastic.

$. Extent of 6se1

7tems having many uses, demand is elastic, 1 /teel

7tems having limited use, demand is inelastic.

8. 9ange of /ubstitutes1

A commodity having a number of substitutes has relatively

elastic demand.

A commodity without or with wea: substitutes has relatively

7nelastic demand.

-. 7ncome level1

Demand for fruits or mil: is inelastic for a rich person,

elastic for a poor person.


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Examples1

;oods < /ervices e+p

=rin>als 8.

5abbage $.(

0ealth insurance ".'

&ublic Transport ".%

Electricity %.


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R(n! R*&t'on+'8

-A($&5 $(n!

-M&$5'n&* $(n!

-In%$"nt&* $(n!

-Tot&* $(n!


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M&$5'n&* R(n!0I 0 . 00!"1 '"$ /.0*. /!$1 2 '" 27S110"+ !"00!"1 $"0 !f f0'% 3'!$*

R RMR = ---------- Q Q


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P$o)*"0

P$'% :t9. D"&ndd TR AR MR

> @ ? K K

? @ >


55/123

R(n! $*&t'on+'80

:t9.D"&ndd TR AR MR

? > ?K Q

>? Q > K > ? K > 1?

Q >? 1 ?K > 1 ? 1Q


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R(n! $*&t'on+'80

:t9.D"&ndd AR TR MR

? > ?K Q

Q >? K > > ? K > 1? Q >? 1 > ?K 1 ? 1Q


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In%$"nt&* R(n!

IR '"8*9 "&!$ t+ d'77$n%)t6n t+ n6 tot&* $(n! &nd

t+ 3't'n5 tot&* $(n!


58/123

P$o)*"0

S!88o t+ 8$'% o7 & %o""od't9 d%$&7$o" R.?1 to R.1 &nd & & $!*t &*'n%$& 7$o" ? !n't to ? !n't.

C&*%!*&t IR &nd MR


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R*&t'on+'8 )t6n P$'% E*&t'%'t9 o7 d"&ndM&$5'n&* R(n! &nd Tot&* R(n!

?.W+n t+ 8$'% *&t'%'t9 o7 d"&nd ' 5$&t$ t+&n on t+ MR ' 8o't'( &nd TR $' & 8$'% 7&**.

>. W+n t+ 8$'% *&t'%'t9 o7 d"&nd ' !n't9 t+ MR ' J$o &nd & %+&n5 'n 8$'% 6'** not %+&n5 TR

. W+n t+ 8$'% *&t'%'t9 o7 d"&nd ' * t+&n on t+ MR ' n5&t'( &nd TR 7&** & 8$'% 7&**.


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C+&n5 'nP$'%

EOD / ?

EOD/ ?

EODE / ?

P'0* R0 TR F11 TRN! *."+

TR R0

P'0* F11 TR R0 TRN! *."+

TR F11

E*&t'%'t9 o7 D"&nd &nd Tot&* R(n!


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D'77$n% )t6n %+&n5 'n d"&nd , EOD

# C+&n5 'n d"&nd o%%!$ 6+n 8$'% do not %+&n5 )!td"&nd %+&n5 d! to o" ot+$ 7&%to$

# EOD o7 d"&nd $7$ to t+&t %+&n5 'n d"&nd 6+'%+ o%%!$ d! to %+&n5 'n t+ 8$'% ot+$ 7&%to$ $"&'n'n5 &"


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INCOME AND DEMAND


63/123

# I"*!% !f 2$7' 20* %" '%0""

# I"*!% 1!"+ /0. 3'0* **!$" f!' %! !f . '00!" 0" 1 !f %"7 *!%%!00


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To 4no6 t+ $*&t'on+'8 )t6n In%o" S&* D"&nd 7o!$ &8%t +&( to )%on'd$d

# Con!"8t'on F!n%t'on

# P$od!%t Con!"8t'on F!n%t'on

# D'77$n% 'n $5'on&* 'n%o"

# In%o" 38%t&t'on &nd d"&nd


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Con!"8t'on F!n%t'on

CF 'f' ! . '10!".03 !f !1 53"0$' !"*!"$%30!" ! !1 0"*!%


66/123

Con!"8t'on F!n%t'on

Y / C @ S @ T

C / Y S 1 T

G$o 'n%o" -Y %&n ) 't+$%on!"d -C &(d'n(td -S o$ 5'(n to t+

5o($n"nt 'n t&3 -T)


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F'nd'n50# In t+ *on5 $!n t+' ' 7&'$*9 t&)*

# It ' to o7 t+ 'n%o"

# In t+ +o$t $!n +'5+*9 'nt&)*

%&n not ) 8$d'%td )9 &n9"&t+"&t'%&* 7o$"!*&


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F'nd'n5 - Contd

D!$'n5 8$'od o7 %ono"'% 8$o8$'t90

E38nd't!$ on %on!"8t'on tnd to 'n%$& &)o*!t*9

)!t d%$& & & 8$%nt&5 o7 'n%o"

In 8$'od o7 d8$'on0

Con!"8t'on d%*'n &)o*!t*9 )!t 'n%$& & &P$%nt&5 o7 'n%o"


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L'"'t&t'on o7 Con!"8t'on F!n%t'on

# S&* o7 'nd'('d!&* 8$od!%t &nd 'n%o" ' dt$"'nd )9 & n!")$ o7 7&%to$ $*&t'( 8$'% d!$&)* &nd non d!$&)* n&t!$ o7 8$od!%t t%. t%.

# Con!"8t'on 7!n%t'on ' %on%$nd on*9 6't+ +o6 "!%+ to 8nd &nd +o6 "!%+ to &( 6't+o!t )'n5 &77%td )9 t+ d%''on on 6+&t to )!9


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II P$od!%t Con!"8t'on 7!n%t'on

It ' t+ $*&t'on+'8 )t6n tot&*In%o" &nd &* o7 & 8&$t'%!*&$8$od!%t

D03!21 3'!"1 0"*!%

P'4C!

"4

P$od!%t %on!"8t'on %!$(


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En5* C!$(

An En5* %!$( ' & 7!n%t'on $*&t'n5 t+!&nt't9 8!$%+&d O7 & %o""od't9 to

t+ *(* o7 'n%o".


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7ncome

!ty

Engel Curve - Necessities


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7ncome

!ty.

Engel Curve - Inferior goods


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D%" f!' . .' +!!, .!/" .', 11 '3!" '7 0ff'"17! . % *."+ 0" 0"*!%, Y ! Y4 D%" f!' . "!'%1 +!!

0"*' f'!% Q ! Q, %" f!' . 1$5$'7 +!! '0 %$*. %!',! Q, " %" f!' . 0"f'0!' +!! f11 f'!% Q ! Q4


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I"*!% E10*07 !f D%"

In%o" *&t'%'t9 o7 d"&nd ' !d to +o6 n't'( t+ d"&nd 7o$ & 5ood ' to

&n 'n%o" %+&n5.


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In%o" E*&t'%'t9 o7 d"&nd

9 0 P$o8o$t'on&t %+&n5 'n :t9. D"&ndd 11111111111111111111111111111111111111111111111111111 P$o8o$t'on&t %+&n5 'n 'n%o"

:> :? 111111111111 :>@:? 11111111111111111111111111 Y> Y?

111111111111 Y>@Y?


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T98 o7 In%o" E*&t'%'t9

4 '! I"*!% E10*07 H' *."+ 0" 0"*!% /011 . "! ff* !" . $"00 %"4 4+4, S1

4 N+0 0"*!% 10*07 A" 0"*' 0" 0"*!% %7

1 ! '$*0!" 0" . $"00 %"4 S$*. +!! +!! ' *11 0"f'0!' +!!4

4 P!00 0"*!% 10*07 A" 0"*' 0" 0"*!% %7 1 ! " 0"*' 0" $"00 %"4


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R*&td P$od!%t# T+ d"&nd 7o$ %$t&'n %o""od't' "&9 ) 'n7*!n%d )9 %+&n5 'n t+ 8$'% o7 $*&td 5ood

R*&td Good0

# S!)t't!t

# Co"8*"nt


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S!)t't!t0

C!%%!00 - /." !" *" 2 '31* 27 "!.'

H' *."+ 0" . 3'0*!f *!%%!07 /!$1 1 ! *."+ 0" . %"f!' "!.' *!%%!07 . *!!f !% !.' *!%%!07

Co"8*"nt0

A *."+ 0" . %" f!' !" *!%%!07 1 ! *."+0" . %"f!' !% !.' *!%%!07, 0" . % 0'*0!"4


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C$o E*&t'%'t9 o7 D"&nd

; T+ 8$o8o$t'on&t %+&n5 'n t+ :t9. d"&ndd o7 & P&$t'%!*&$ %o""od't9 'n $8on to & %+&n5 'n t+

8$'% o7 &not+$ $*&td %o""od't9 1 :3? 1111111111111111 :3> @ :3? 111111111111111111111111111 PJ> 1 PJ?

111111111111111 PJ> @ PJ?


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C$o1P$'% E*&t'%'t9 o7 D"&ndT+ C$o1P$'% E*&t'%'t9 o7 D"&nd "&!$ t+$&t o7 $8on o7 !&nt't9 d"&ndd o7 on 5ood

d! to & 8$'% %+&n5 o7 &not+$ 5ood.


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P$o)*"0 T+ !&nt't9 d"&ndd o$8$od!%t A +& 'n%$&d )9 ?> 'n$8on to & ? 'n%$& 'n 8$'% o7

8$od!%t B. C&*%!*&t t+ %$o *&t'%'t9 o7d"&nd &nd t** 6+t+$ t+ 8$od!%t 8&'$' -& &88* &nd o$&n5 o$ -) %&$ &nd5&

C$o E*&t'%'t9


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Problem: If the price of Coca Colaincreases from 50p to 60p per can,

and the demand for Pepsi Cola increafrom 1m to 2m per year.Calculate X! bet"een the t"o produ

C$o E*&t'%'t9


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P$o)*"0 I7 t+ 8$'% o7 C'n"& T'%4tIn%$& 7$o" . to Q. &nd t+d"&nd 7o$ Po8%o$n d%$& 7$o" ?t!) to Q.C&*%!*&t XED )t6n t+ t6o 8$od!%t.

C$o E*&t'%'t9


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I7 t+ %$o *&t'%'t9 ' 8o't'( 1 5ood&$ !)t't!t

I7 n5&t'( 5ood &$ %o"8*"nt


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I7 t6o 5ood &$ !)t't!t 6 +o!*d 38%t to %on!"$ 8!$%+& "o$ o7 on 5ood 6+n t+8$'% o7 't !)t't!t 'n%$&.

S'"'*&$*9 '7 t+ t6o 5ood &$ %o"8*"nt 6+o!*d & 8$'% $' 'n on 5ood %&! t+d"&nd 7o$ )ot+ 5ood to 7&**


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Ad($t''n5 , S&* P$o"ot'onAd($t''n5 %on't o7 t+o &%t'('t' )9 6+'%+ V'!&*o$ O$&* "&5 &$ &dd$d to *%td $8ondnt7o$ t+ 8!$8o o7 'n7o$"'n5 &nd 'n7*!n%'n5 t+" to )!9P$od!%t o$ S$('%

I"8o$t&nt F!n%t'on

# S+'7t t+ d"&nd %!$( to t+ $'5+t

# Rd!% t+ *&t'%'t9 o7 d"&nd


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Ad($t''n5 E*&t'%'t9 o7 D"&nd

:> 1 :? 1111111111111 :> @ :?

& / 11111111111111111111 A> 1 A? 11111111111111 A> @ A?


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F&%to$ dt$"'n'n5 &d($t''n5 *&t'%'t9 o7 d"&nd

# T98 o7 %o""od't9

# M&$4t +&$

# R'(&* &%t'on

# St&t o7 %ono"9


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E%ono"'% '"8*'%&t'on o7 &d($t''n5

# In7o$"'n5 %on!"$# B$o&dn'n5 M&$4t

# Lo6$'n5 **'n5 %ot

# En%o!$&5'n5 %o"8t't'on


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DEMAND FORECASTING# A%%!$&t D"&nd Fo$%&t'n5 ' nt'&*

# It n&)* to 8$od!% t+ $!'$d :t9.

&t t+ $'5+t t'" "&4 &(&'*&)* &t t+ $'5+t 8*&%

# En&)* & 7'$" to &$$&n5 (&$'o! 7&%to$ o7

8$od!%t'on

F&%to$ to ) %on'd$d 'n D"&ndFo$%&t'n5


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5

# H!/ f' .

S.!' '$" L!"+ '$"

# A /. 11 DF ! 2 !"

# G"'1 DF !' S3*0f0* DF

# T73 !f 3'!$*

# F*!' 3*$10' ! %'8 !' 3'!$*


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P!$8o O7 D"&nd Fo$%&t'n5

S+o$t T$"# H*8 'n 8$od!%t'on %+d!*'n5 to &(o'd 3% +o$t !88*'

# H*8 'n $d!%'n5 %ont$o**'n5 'n8!t 7&%to$ , In(nto$9

# H*8 'n d%'d'n5 P$'% Po*'%9

# H*8 'n tt'n5 t&$5t t&)*'+'n5 %ont$o* , 'n%nt'(

# H*8 'n 7o$"!*&t'n5 &d($t''n5 , 8$o"ot'on&* t$&t5'

# H*8 'n 7o$%&t'n5 7'n&n%'&* $!'$"nt


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Lon5 T$"

# H*8 6+n 8*&nn'n5 n6 !n't o$ 38&n'on

# H*8 'n 8*&nn'n5 *on5 t$" 7'n&n%'&* $!'$"nt

# H*8 'n 8*&nn'n5 "&n 8o6$ $!'$"nt


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C$'t$'& o7 & Good Fo$%&t'n5 Mt+od

# I .!$1 3'!$* **$' '$1

# I .!$1 2 0%31 ! $"'"

# I .!$1 7 ! *!%3'."

# I .!$1 2 *!"!%0*1

# I .!$1 "$' 0120107


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P&'( V A%t'( Fo$%&t'n5


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METHODS OF DEMAND FORECASTING

?.S!$(9 o7 B!9$ Intnt'on>.D*8+' Mt+od.E38$t O8'n'on.Co**%t'( O8'n'on

.N&( Mod*K.S"oot+'n5 T%+n'!Q.An&*9' o7 T'" S$' &nd T$nd P$o%t'on.U o7 E%ono"'% Ind'%&to$

.!d5"nt&* A88$o&%+


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Nave Model

1)Ft+1 = At

2)Ft+1 = At + ( At At-1)

3)Ft+1= At At/At-1


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Mont+ ? > K Q ? ?? ?>

S&*-'nR

> KQ >? K Q ? > ? K?

NAZVE MODLES

P$o)*"0

Con'd$ t+ 7o**o6'n5 &* d&t&0


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Nave Model

1)Ft+1= At

)F = R4@,JJ,JJJ


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Nave Model

2) Ft+1= At+ ( At At-1)

> / K? @ -K? ? / K? @ > / R.K


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Nave Model

3)Ft+1= At At/At-1

) F? / K? 3 -K? ? / R.K


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SMOOOTHING TECHIN:UES -H'5+$ Fo$" o7 N&( Mod*

T6o T%+n'!

?.Mo('n5 A($&5>.E38onnt'&* S"oot+'n5


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P$o)*"

D&t S&*-R.

--K ?@,JJJ--K K?,JJJ--K K,JJJ

?--K ?@,JJJK--K K>,JJJ@--K ?,JJJ--K K?,JJJ

F!'* 1 f!' >--K " --K 27 %!0"+A'+ %.!, 80"+ 05 7 4


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Mo('n5 A($&5

@ @ K @ @ @ 1?1? / 111111111111111111111111111111111 K

/ R.>

@ K @ @ @ @ >1?1? / 11111111111111111111111111111111111 K / R.>


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E38onnt'&* S"oot+'n5

N6 Fo$%&t / L&t P$'od 7o$%&t @ & - L&t 8$'od &%t. D"&nd *&t 8$'od 7o$%&t

W+$ 0

& / S"oot+'n5 Cont&nt - & ?

Ft / Ft ? @ &-At ? 1 Ft ?


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#ime Period $t% &ctual sales $ &t%

's

Predicted (ales

$)* t%

1 60

2 6+

5-+ 66

5 0

6 60

-

/

10


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So*!t'on0 K @ @ KK @ Q @ KF-Q / 1111111111111111111111111111111111 / ?

/ K.K

F- / K.K @ .>-Q K /K.

F- / KK.Q @ .>-Q K. / KK.Q

F-? / K.QK @ .>-K> KK.Q / K.QK


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#ime Period $t% &ctual sales $ &t%

's

Predicted (ales

$)* t%1 60

2 6+

5-

+ 66

5 0

6 60

0 6.6- + 6+.--

/ 62 66.0

10 + 65.6


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U O7 E%ono"'% Ind'%&to$

T+' &88$o&%+ )& d"&nd 7o$%&t'n5 on %$t&'n%ono"'% 'nd'%&to$.

.5.

# Cont$!%t'on %ont$&%t &n%t'ond 7o$ d"&nd o7 )!'*d'n5 "&t$'&*# P$on&* 'n%o" 7o$ t+ d"&nd o7 %on!"$ 5ood.# A!to"o)'* $5't$&t'on 7o$ t+ d"&nd o7 %&$ &%%o$' 8t$o* t%.

T+' %ono"'% 'nd'%&to$ &$ 8!)*'+d )9 8%'&*'d &5n%' *'4C.S.O


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Analysis of Time Series and Trend Projections


112/123

SALES


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L&t S!&$ Mt+od

It ' &!"d t+&t t+$ ' & 8$o8o$t'on&* %+&n5 -*'n&$ 'n &*o($ & 8$'od o7 t'". In !%+ & %& t+ t$nd *'n !&t'on' 'n *'n&$ 7o$". W+$ t+' &!"8t'on do not +o*d 5oodt+ !&t'on %&n ) non *'n&$

C$t&'n t&t't'%&* 7o$"!*& &$ !d to 7'nd t+ t$nd *'n 6+'%+[)t 7't t+ &(&'*&)* d&t&. T+ t$nd *'n ' t+ )&' to3t$&8o*&t t+ *'n 7o$ 7!t!$ d"&nd.


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P'!21% Analysis of Time Series and Trend Projections

Y&$ ?> ? ?K ? >

S1(RL8.)

K >? > >>

E0% . 1 f!' . 7' JJ " JJ?


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116/123


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Et'"&t'n5 *'n&$ t$nd !&t'on

S = 3 7(T)

T! f0" . 1$ !f 5 " 7, . f!11!/0"+ "!'%1 $0!"

. ! 2 !14

S = "5 7T

ST = 5T 7 T

S/ S&* T / 9&$ n!")$ n / n!")$ o7 9&$


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Y&$ Y&$ no.

-T

S&*-S

R. L&4+

ST T>

K

? >?

@ K

> >JJJ >>

S$%(T) = S$%(S)= S$%(ST)= S$%-T> )=


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Y&$ Y&$ no.-T

S&*-SR. L&4+

ST T>

K K

? >? K

@ K ?@J K

> > @>@ ?JJJ >> >

S$%(T) =K

S$%(S)=? S$%(ST)=@K

S$%-T> )=@K


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So*!t'on0

Q / X @ >Y 111111111111 -?>>K / >3 @?KY 111111111111 ->

>? / >X @ ?>Y 11111111111->>K / >X @ ?KY 11111111111-

- / 1Y Y / >

X / QQ.

T$nd V&*!0


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T$nd V&*!0

T -? / QQ. @ >3? / Q.

T- / QQ. @ >3 / .

T- / QQ. @ >3 / Q.

T-Q / QQ. @ >3Q / ?.

T- / QQ. @ >3 / .

T-?? / QQ. @>3?? / .

T-? / QQ. @ >3? / ?.


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YEAR SALES T$nd

K 4?

? >? >4?

@ >4?

> > 4?

JJJ >> K4?JJ 4?

JJ? J4?


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MEA Unit II

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Transcript of MEA Unit II